Introduction to Forex: Understanding the Mechanisms of the Global Foreign Exchange Market
What is Forex?
The word “Forex” is an abbreviation of “foreign exchange”, which means “foreign exchange”. It is an international market where one currency is exchanged for another. Unlike other financial markets, where trading takes place on an exchange, Forex is a market without a specific trading venue, where transactions are made electronically via the internet.
How does forex work?
In forex, currencies are always traded in pairs – for example, EUR/USD. The first currency in the pair is called the “base currency” and the second is called the “quoted currency”. The price you see is how many units of the quoted currency you get for one unit of the base currency.
Who is Forex for?
Previously, the Forex market was mainly handled by prosperous individuals, organizations, and concerns. Nowadays, thanks to the availability of the internet and online trading platforms, anyone has the opportunity to become a part of the global foreign exchange market with even a small start-up capital.
Risks on Forex
It is necessary to realize that Forex trading is associated with a significant financial risk. The fact is that the object of trade on this market are currency pairs, quotes of which can change every second. This means that a trader's capital can grow significantly in a short period of time, but also go into a minus if his forecasts are wrong.
Forex trading schedule
Forex trading sessions are determined by the working hours of the world exchanges:
Tokyo session opens at 00:00 GMT;
London Stock Exchange from 08.00;
New York Stock Exchange – from 13.00;
Singapore and Hong Kong – at 02.00 and 03.00 respectively.
Forex is an interesting and complex financial world that requires comprehensive knowledge and a certain skill to trade effectively. It is not just an income or investment, it is a full-fledged endeavor that requires strategies, critical thinking and an understanding of the effects of ephemeral socio-economic changes on the currencies of the world.
Traders need to learn the basics of Forex, think through their strategy and risk management, only then can they thrive and gain the experience to make a steady income. The darkest thing to keep in mind is that Forex trading should not be seen as a way to “make easy money”, as the market is quite capable of bringing more losses than profits to those who are not prepared for its volatile nature.
If you are new to this market, consider learning or scrutinize the free online educational materials offered by independent exporters or brokerage platforms before making any real bets. And always keep in mind the riskiness of this endeavor. At the end of the day, the key advice for everyone, and especially for beginners, is to premeditate and don't limit yourself with knowledge. Success and prosperity are waiting around the corner, making your dreams come true!